FILED
NOT FOR PUBLICATION FEB 27 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
EASTWOOD INSURANCE SERVICES, No. 10-56314
INC., a California Corporation;
EASTWOOD INSURANCE AGENCY D.C. No. 8:08-cv-00788-CJC-AN
OF TEXAS, INC., a Texas Corporation;
EASTWOOD INSURANCE AGENCY
OF NEVADA, INC., a Nevada MEMORANDUM *
Corporation; EASTWOOD INSURANCE
AGENCY OF FLORIDA, INC., a Florida
Corporation; EASTWOOD AUTO
INSURANCE AGENCY OF ARIZONA,
INC., an Arizona Corporation,
Plaintiffs - Appellants,
v.
TITAN AUTO INSURANCE OF NEW
MEXICO, INC., a New Mexico
Corporation; THI HOLDINGS, INC., a
Delaware Corporation, Erroneously Sued
As Thi Holdings (Delaware) Inc;
NATIONWIDE MUTUAL INSURANCE
COMPANY, an Ohio Company,
Defendants - Appellees.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
EASTWOOD INSURANCE SERVICES, No. 10-56851
INC., a California Corporation;
EASTWOOD INSURANCE AGENCY D.C. No. 8:08-cv-00788-CJC-AN
OF TEXAS, INC., a Texas Corporation;
EASTWOOD INSURANCE AGENCY
OF NEVADA, INC., a Nevada
Corporation; EASTWOOD INSURANCE
AGENCY OF FLORIDA, INC., a Florida
Corporation; EASTWOOD AUTO
INSURANCE AGENCY OF ARIZONA,
INC., an Arizona Corporation,
Plaintiffs - Appellants,
v.
TITAN AUTO INSURANCE OF NEW
MEXICO, INC., a New Mexico
Corporation; THI HOLDINGS, INC., a
Delaware Corporation, Erroneously Sued
As Thi Holdings (Delaware) Inc;
NATIONWIDE MUTUAL INSURANCE
COMPANY, an Ohio Company,
Defendants - Appellees.
Appeal from the United States District Court
for the Central District of California
Cormac J. Carney, District Judge, Presiding
Argued and Submitted February 9, 2012
Pasadena, California
Before: D.W. NELSON, O’SCANNLAIN, and N.R. SMITH, Circuit Judges.
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I
Eastwood Insurance Services, Inc. first appeals the district court’s order
granting summary judgment in favor of Titan Auto Insurance of New Mexico, Inc.
on Eastwood’s fraud claims. The district court granted summary judgment after
finding Eastwood’s evidence of Titan’s alleged misrepresentations inadmissible
under California’s parol evidence rule, which bars extrinsic evidence of a promise
“directly at variance with the promise of the writing.” Bank of Am. Nat’l Trust &
Sav. Ass’n v. Pendergrass, 48 P.2d 659, 661 (Cal. 1935). Titan’s alleged
statements were unconditional promises that directly varied the qualified language
of the agreement. See Cont’l Airlines, Inc. v. McDonnell Douglas Corp., 264 Cal.
Rptr. 779, 794–96 (Ct. App. 1989). The district court’s grant of summary
judgment in favor of Titan on Eastwood’s fraud claims was proper.
II
Eastwood next challenges the district court’s order granting summary
judgment in favor of Titan on Eastwood’s breach of contract and breach of the
implied covenant of good faith and fair dealing claims. The parties’ agreement
contained an earnout clause requiring Titan to use “commercially reasonable
efforts” to maximize the performance of Eastwood’s assets; Eastwood contends
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that Titan breached the contract and acted in bad faith by acting to increase
profitability at the expense of this contractual obligation.
Commercial reasonableness “primarily involve[s] questions of fact, based on
all the circumstances.” Gifford v. J & A Holdings, 63 Cal. Rptr. 2d 253, 259 (Ct.
App. 1997). The district court granted summary judgment in favor of Titan after
concluding that it would be “a commercial absurdity” to require Titan to maximize
the performance of Eastwood’s assets at the expense of its own profitability. But
while “economic feasability and profitability . . . may be one circumstance of
commercial reasonableness, other factors, particularly those in the . . . industry,
will be relevant to the determination.” Sempra Energy Res. v. Cal. Dep’t of Water
Res., No. D043397, 2005 WL 1459950, at *9 n.12 (Cal. Ct. App. June 21, 2005)
(emphasis added). Whether Titan’s efforts were commercially reasonable under
the circumstances is a factual determination requiring consideration not only of
Titan’s profitability but also of the standards and customs of the industry, context,
and intent, and it should not have been resolved on a motion for summary
judgment. The district court erred in concluding there were no genuine issues of
material fact for trial.
III
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Last, we vacate the award of attorneys’ fees to Titan. Under the parties’
agreement, attorneys’ fees are awarded only to a prevailing party. Awarding
attorneys’ fees should thus be deferred until there has been a final determination on
the merits. Cf. Turner v. McMahon, 830 F.2d 1003, 1009 (9th Cir. 1987).
AFFIRMED in part, REVERSED in part, VACATED, and REMANDED
for proceedings consistent with this disposition.
Each party shall bear its own costs of appeal.
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